Personal Loans

Loan Approval: Which Loan Is Easiest to Get?

When you're a perfect borrower, any loan is easy to get. But if you have credit issues or need money really fast, some providers are better than others. Here's how to find the easiest and fastest loan approvals around.
a man applies for a loan using his laptop computer
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By Gina Freeman
Updated on: August 17th, 2021

What are the easiest loans to get approved for? It depends on what you need and what you bring to the table. The loans below all offer easy approval for different types of applicants. Look them over and see which one checks your boxes.

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Unsecured Personal Loans

Unsecured personal loans require no collateral. (Collateral is an asset that you allow the lender to take and sell if you don’t repay your loan.) This makes unsecured loans riskier for personal loan providers. Your credit rating is more important for unsecured loan providers because the loan is only backed by your promise to repay it.

Why it’s easy

Personal loan approval is fast and most approved loans fund in days if not hours. That’s because there is no collateral to appraise and because underwriting is nearly always automated.

Why it might be hard

If your profile doesn’t easily and obviously drop into the lender’s “approve” box, you might run into problems. If your credit report is inaccurate, or your income isn’t easy to prove, or you “just miss” the lender’s minimum standards, automated systems usually decline your application. Some lenders will accept co-signers, which could help you get loan approval or a better rate even with poor credit.

401(k) Loan

Many employers allow employees to borrow against their 401(k) retirement accounts. If yours does, you can borrow up to 50% of your vested balance or $50,000, whichever is less.

Why it’s easy

With a 401(k) loan, you’re really borrowing from yourself. So there is no minimum credit score. And the interest you pay goes back to your own account.

Why it might be hard

These loans can be dangerous, however. If you quit or lose your job, you must pay back the loan or face stiff tax penalties. And while your loan is outstanding, you can’t contribute to your retirement plan. That can have serious consequences in the future.

Peer-to-Peer Loan (P2P)

P2P loans are also unsecured personal loans. But you get them from individuals instead of banks and loan companies. You apply for P2P loans online, indicating how much you need to borrow and the interest rate you’re willing to pay. The website assigns you a credit grade, and individual investors decide if they are willing to take your offer.

Why it’s easy

The advantage of P2P is that machines don’t make the decisions. Human investors do. And you can explain irregularities and credit issues to these humans and sometimes get loan approval even with credit problems.

Why it might be hard

If your credit history is not good, you’ll still have difficulty getting loan approval. And interest rates for borrowers with poor credit can be even worse than credit card interest rates.

Short-Term and Payday Loans

Payday or check advance loans have very short terms (seven to 30 days) and painfully high fees. Their providers often advertise “personal loans with no credit check” or “personal loans for bad credit.” The lender advances you cash and you repay the advance with a post-dated check to cover the loan plus its fees.

Why it’s easy

The loans are widely available online or in local branches. Most vendors will approve your application on the spot if you have a job and a checking account.

Why it might be hard

Check advance and payday loans are the most expensive in the business. Maximum loan amounts are low and fees are high. A typical fee to borrow $300 is $60 for 14 days. That’s an APR of over 500%. Many borrowers renew their loans again and again because they cannot pay them off, and every rollover incurs a new fee.

Secured Loans

Secured loans get their name because the borrower pledges some form of collateral that the lender can take and sell if the borrower fails to repay the loan as agreed. Mortgages and auto loans are secured loans backed by the house or car being financed.

Why it’s easy

Secured loans are less risky for lenders than unsecured loans. That means interest rates are lower and the borrower’s credit is less important.

Why it might be hard

You need acceptable collateral to secure your loan. That means you must own a home, auto, financial asset, or other property acceptable to the lender. It can take longer to process these loans because the lender must appraise the collateral. The upfront fees can be higher because of the extra processing involved.

How to Choose the Right Loan

The right loan for you depends on your needs and resources. Here are a few considerations:

  • If you have bad credit, your best loans are likely to be secured. And 401(k) loans are often your cheapest and best secured option. Peer-to-peer lenders might take pity on you if you can explain your situation. The most costly and dangerous loan is the payday or short-term product.
  • Applicants with excellent credit can qualify for personal loans with interest rates as low as secured loan rates. And the personal loan process is faster and cheaper.

You can easily compare personal loan interest rates, apply and get a decision quickly online. That’s often the best way to start.

About the Author

Gina Freeman writes about personal finance and has been featured on AmOne.com, The Mortgage Reports, MSNMoney, Fox Business, Forbes, The Motley Fool, and other fine websites. Her background includes tax accounting with Deloitte, over 20 years in mortgage sales and underwriting, systems consulting for Experian, and several years in bankruptcy law. Gina enjoys helping consumers make confident and intelligent financial decisions.